With reports that the 2020 harvest is beginning in earnest this month, there is significant uncertainty amongst market participants as to how farm gate prices for hemp plant material will respond to the influx of new production. With 2020’s crops not yet dried and processed for sale for the most part, this month’s assessed prices for last year’s CBD and CBG Biomass were down from July. However, based on our observations from over five years covering legal cannabis markets, wholesale prices can increase with the arrival of a new fall crop, as fresh plant material can garner better rates than that which is nearly a year old.
We pointed out in last month’s report that registered acreage for 2020 is down about 30% year-over-year. Early reports from state officials suggest a smaller percentage may have been planted this year compared to 2019, when only about half of registered acreage was farmed.”
Reports from the field indicate growing conditions were mixed across the U.S. Oregon, one of the country’s biggest hemp-producing states, appears set to see a bumper crop if conditions hold. Elsewhere, farmers reported that high heat and drought have led to plants flowering prematurely, leading to earlier harvests and lower yields. Persistently dry conditions in many parts of the country should help producers better preserve biomass and flower from mold that rendered unsaleable a significant portion of last year’s crop. Overall, though, Hemp Benchmarks still expects that 2020’s production of CBD and other cannabinoid-rich biomass will be down from last year, possibly significantly so.